Authorities in Laos have issued an order informing hold-out residents of an area in the capital slated for a massive urban development project that they are not to sell their land as it now belongs to the site’s developers from China.

The order came amid general concerns of government mismanagement and corruption in disputes between residents and investors.

The planned U.S. $1.6 billion project under construction in Vientiane’s That Luang marsh area has been hailed as a showpiece commercial center in the fast-growing capital, but residents say they were offered compensation less than one-tenth of market value for their land.

The 1.25 square mile (3.25 square kilometer) That Luang Marsh Specific Economic Zone broke ground in December, but while a majority of residents have accepted the pay out, more than 100 families had held out for more, refusing to move from the site.

Recently the Vientiane municipal government issued an order prohibiting all sale, purchase, and transfer of land in eight villages in Xaysettha district, where the project is located, an official in charge of administering Special and Specific Economic Zones told RFA’s Lao Service.

According to the order, the villages are included in the 365-hectares (900-acre) concession granted to Chinese project developer Shanghai Wan Feng Group, he said, speaking on condition of anonymity.

“No consideration will be given” to people who claim they are the lawful owners of the land and property in the villages, the official said, though the government will provide monetary compensation to those who give up their land for the project, he said without elaborating on the reimbursement scheme.

The development project is part of an effort to modernize Vientiane and draw increased tourism to the city. It will include a public park, sports complex, shopping mall, entertainment complex, and service centers.

The SEZ will also provide infrastructure for businesses trying to establish a presence in the capital.

Some 435 families have been affected by the project and residents complain they have had little say in the decision-making process about development in the area, for which plans have been in the works for several years.

In 2010, plans for an even bigger urban development project on a 3.9-square-mile (10-square-kilometer) area in the same location by a different Chinese developer were scrapped because, according to then-minister of planning and investment Sinlavong Khoutphaythoune, the company was reluctant to pay U.S. $400 million in relocation compensation to the roughly 7,000 affected households.

Dispute factors

A senior State Inspection Agency official told RFA this week that land disputes between companies granted concessions and Lao citizens are largely due to government mismanagement and corruption.

He did not cite any specific project.

Speaking on condition of anonymity, the official said that the most common practices by local government that lead to land disputes are granting concessions without first surveying or measuring land and using land as capital for development projects.

He said other practices include the relocation of people impacted by development at drastically low rates of compensation and abuse of power by officials who are bribed to seize land from residents to lease to investors.

Over the past three years, he said, inspections have shown that bribery is a common malpractice among officials, in addition to the use of threats and referring to false laws to force unwitting citizens from their land.

Even when residents who are more informed about their legal rights fight back, they are often at a disadvantage, he said, adding that more than 4,000 lawsuits against the government are currently languishing in courts across the country.

According to field inspections, the official said, government land concessions often encroach on private land, while investors granted concessions frequently encroach upon national forest reserves to carry out illegal activities such as cutting down trees for export.

Laos, one of the least developed Southeast Asian states, has become the subject of massive foreign investment, especially from companies from China, Thailand, and Vietnam.

Much of Laos’s economic growth has come from land concessions for natural resources—including timber, agricultural products, minerals, and energy—but some worry that it comes at a cost for those who lose their land.

Reported by RFA’s Lao Service. Translated by Viengsay Luangkhot. Written in English by Joshua Lipes.